Personal Global Connections and New Residential Differentiation in Shanghai, China

The spatial distribution and division of residents in a city reflect their varied socioeconomic status. Residents tend to choose where they live based on their demographic background, income level and social status, as well as other individual considerations and environmental circumstances. While residential choices in a market society are relatively free, they are much more limited in a planned urban economy where the government regulates where people live through land control, public housing construction and administrative allocation of housing. As a result, residential patterns under government planning and distribution are much less differentiated than under a functioning real estate market.

What happens to residential spatial patterns in a city if it is undergoing rapid transition from residential control towards growing residential choice? More importantly, if greater residential choice contributes to more differentiated residential patterns, does residential differentiation become more striking due to other complicating external forces?

Chinese cities in general, and the booming coastal cities such as Shanghai in particular, have experienced growing residential differentiation in recent years as a result of rapid real estate development replacing the traditional government control over the housing sector. This shift has been accompanied by penetration of global economic and cultural forces such as capital inflow and consumer trends, which in turn have added more fuel to the lively or "hot" housing market and thus accelerated residential differentiation. All of these internal and external structural dynamics have unfolded in conjunction with a marked differentiation of individual life chances and lifestyles based on more divergent socioeconomic characteristics and resources. As the emergence of a housing market has created a greater variety of residential choices to individuals in a re-stratified socio-spatial order, it can be expected that there be a new relationship between the characteristics of residents and the types and locations of their residence.

Shanghai has not only experienced the most rapid economic growth of any city in China. It has also exhibited the most active and fastest rising or appreciating local real estate market anywhere over the last few years. The average sales price for residential property in Shanghai doubled since 1997, surging 26 per cent in 2004 alone, to US$784 per square meter.¹ Accelerated economic and housing reforms, government-driven urban redevelopment, rising income inequality, more diverse individual lifestyles, and global economic and cultural influences have intersected to create a multitude of residential opportunities and constraints. While luxury apartments and exclusive villas including even gated communities have been built for a small number of the very rich, a still relatively small but growing proportion of the population can afford to buy new commercial housing units of middle-range prices. Some elderly residents in the central city have been "forced" to move to lower-grade economical housing, built for so-called chaiqian (people forced to move because their homes were demolished) residents, on the outskirts after their old houses have been torn down to make room for new office buildings and shopping plazas. Large numbers of residents have also become dependent low-interest bank loans to purchase new commercial housing. Soaring prices, however, have made housing increasingly unaffordable for many residents. This has led Shanghai authorities to intervene in the hot property market in March 2005 by imposing a 5.5 per cent capital-gains tax on apartments sold more than once in a year and instructing banks to require down payments of as much as 50 per cent on some mortgages.²

While these characteristics and developments constitute a broad context for this study, below is a brief survey of the recent literature that pertains to the distinct analytical focus of this paper.

Studies on Spatial and Housing Development in China

While not all of the specific residential processes mentioned in the preceding section have yet been carefully studied, spatial differentiation in general and residential differentiation in particular in Chinese cities have received considerable scholarly attention. Although space here does not permit a full review of this literature, it is sufficient here to identify its main foci. First of all, scholars have studied the causes and consequences...